India on Friday withdrew the Most Favoured Nation (MFN) status to Pakistan, a day after 40 CRPF personnel were killed in a terror attack in Pulwama. “Most Favoured Nation status to Pakistan stands withdrawn,” Union Finance Minister Arun Jaitley told reporters. Pakistan-based terror outfit Jaish-e-Mohammad claimed responsibility for the attack, saying it was caused by suicide bomber Adil Ahmad.
What is MFN status?
In international trade, MFN treatment is synonymous with non-discriminatory trade policy as it ensures equal trading among all WTO member nations rather than exclusive trading privileges.
MFN status tries to ensure non-discriminatory trade between all partner countries of the WTO. According to first clause in the General Agreement on Tariffs and Trade (GATT), if a country gives MFN status to another country, it has to provide concessions, privileges, and immunity in trade agreements.
Under the rules of WTO, a member country is not allowed discriminate between trade partners. If a special status is granted to one trade partner, the country is required to extend it to all the members of the WTO. Since India and Pakistan are part of WTO, both need to grant MFN status to each other and other partner nations.
An MFN status reduces trade barriers and tariffs between the countries. It is to be noted that MFN status is not a preferential treatment, but it makes sure that any country receiving MFN status avoids any disadvantage in comparison to granter’s other trade partners.
India granted MFN status to Pakistan in 1996, however, Pakistan is yet to give MFN status to India. Pakistan alleges decades of conflict, mistrust and war as the reason behind the same.
With inputs from ANI
